AlwaysFree: Alberta: Higher Energy Prices to Cut Fiscal Deficit

On Tuesday, the government of the Canadian main oil-producing province of Alberta said that higher energy prices could cut its fiscal deficit.

Alberta’s budget deficit in the 2021/2022 fiscal year has now been trimmed to CAD5.8 billion (USD4.5 billion). The previous forecast in August mentioned a budget deficit of CAD7.8 billion (USD6.1 billion).

The province’s real gross domestic product is now estimated to expand by 6.1% after contracting by 7.9% last year. However, it was still lower than the 6.7% projected in August.

In the update of the budget, Alberta said that drilling activity and crude production had increased while business output remained solid. Personal and corporate tax revenues will rise as well.

Finance minister Travis Toews attributed the bullish prediction to improved employment, solid consumer spending, residential construction and activity, and stronger-than-expected global energy demand growth which was boosting oil and natural gas prices.

Looking forward, however, clouds are lingering on the outlook. Alberta’s government expected the rising input costs, supply-side bottlenecks, and labor shortages in some industries to restrain job gains in the near term.

Other than that, the concerns regarding the new coronavirus variant have been battering oil prices after it surged to multi-year highs in October. It remains to be seen how the spread of the variant will affect demand for crude.

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